Brexit: Doing business in the EU

Posted in Banking and finance Financial institutions Financial services

Spain: updated 11 March 2019

Poland: new country added 12 March 2019

Italy: updated 13 March 2019

Denmark: updated 18 March 2019

Germany: updated 18 March 2019

We have produced a colour coded heat map and table identifying the temporary emergency measures being implemented in EEA jurisdictions, and how financial services provides can benefit from these measures. We recommend that this resource be read in conjunction with this article. You will find our heat map and table on Brexit Pathfinder, our free Brexit hub housed on the Norton Rose Fulbright Institute portal. If you are registered to the Institute, please find Brexit Pathfinder here. To register for access to the Institute, please click here.


The UK Government has announced a temporary permissions regime (TPR) for inbound passporting EEA firms and funds. The TPR will come into effect in the event of a hard Brexit, and will provide a temporary backstop to ensure that such firms and funds can continue their UK business with minimal disruption.

In order to take advantage of the TPR firms and funds need to make a notification to the UK Financial Conduct Authority (FCA) or UK Prudential Regulation Authority (PRA) as appropriate before the end of 28 March 2019. Once in the TPR the FCA or PRA (as relevant) will allocate a “landing slot” in which the firm or fund must submit its application for UK authorisation. The FCA anticipates that its first landing slot will be October to December 2019 followed by a further five landing slots with the last one closing at the end of March 2021. Further information on the TPR can be found on our Brexit Pathfinder hub. Registration is free via the NRF Institute portal.

EU response

The TPR is only relevant for firms that passport into the UK. The European Commission has so far not reciprocated with a similar regime and has instead continued to push for UK firms to submit an application for authorisation in the relevant Member State where they wish to conduct business. In particular, the “no-deal” Contingency Action Plan of the European Commission deliberately provides for a limited number of contingency measures only (including temporary and conditional equivalence regimes for UK central counterparties and UK central depositaries). However, we have seen a number of EU27 regimes take their own steps.

The following is a summary concerning the current position in some of the key EU27 jurisdictions.


The German parliament has adopted a bill which, inter alia, sets out a national transition regime for regulated market participants from the UK in case of a hard Brexit. Given the tax-related provisions also included, the bill is entitled “Tax Act relating to Brexit” (Brexit-Steuerbegleitgesetz – Brexit-StBG).

The bill seeks to avoid market distortions and risks to financial stability in a hard Brexit scenario. Accordingly, the transitional provisions regarding market access of UK institutions introduced by the bill will only apply in the event that the EU and the UK do not enter into a Withdrawal Agreement.

It will enter into force on 29 March 2019. The regulatory transitional rules, however, refer to an unspecified date of withdrawal and, therefore, will also cover a situation in which the UK leaves the EU following an extension without a deal.

General transition regime

The Brexit-StBG introduces transitional rules for the following regulated market participants and trading venues that target the German market from the UK:

  • credit institutions;
  • investment firms;
  • insurance undertakings;
  • payment institutions and electronic money institutions;
  • regulated markets, multilateral trading facilities (MTFs) and organised trading facilities (OTFs).

The German regulator (BaFin) will be empowered to allow the UK entities covered by the transitional regime that have operated in Germany under the  European passport regime so far to continue providing certain services without a German license, each for a period of up to 21 months following a hard Brexit (i.e., until the end of 2020 at the latest):

  • for UK credit institutions and investment firms that, as applicable, conduct banking business and/or provide investment services in Germany through a branch or on a cross-border basis under the European passport regime on 29 March 2019, BaFin may determine that the passport regime under the German Banking Act (KWG) continues to apply, fully or partially;
  • for UK insurance undertakings, BaFin may determine that the respective passport regime under the German Insurance Supervision Act (VAG) continues to apply to UK insurers and reinsurers operating in Germany under a passport on 29 March 2019; and
  • for UK payment institutions and electronic money institutions, BaFin may similarly determine that the respective passport regime under the German Payment Services Supervision Act (ZAG) continues to apply, fully or partially.

Such general transition periods will apply to all covered UK entities without the need for any additional application or notification. However, in relation to new business after Brexit, the scope of the general transition regime set out in the bill is limited:

  • UK credit institutions, investment firms, payment institutions and electronic money institutions are only authorised to conduct their regulated activities if these activities are “closely connected” to contracts that existed at the time of withdrawal. The bill’s explanatory statement mentions certain examples of the required “close connection” such as (i) hedging transactions, (ii) lifecycle events, (iii) netting transactions, (iv) portfolio compression transactions, (v) prolongations or (vi) the exercise of contractual option or conversion rights.
  • for UK insurance undertakings, the transitional regime only covers the run-off of insurance contracts that were concluded before the time of withdrawal.

Furthermore, BaFin may order that UK markets for financial instruments listed as trading venues in the respective register of ESMA at the time of withdrawal are deemed to be trading venues within the meaning of the German Securities Trading Act (WpHG) for a transitional period of up to 21 months. During such period, no application for an authorisation as a third country trading venue will be needed, thus allowing German participants to continue their trading activities on these regulated markets, MTFs and OTFs.

The general transition regime introduced by the bill only covers UK entities operating under a European passport. Despite criticism by certain pressure groups, the bill does not refer to services provided by UK branches of EEA institutions back to clients in the EU (so-called “back-branching”). Such structures currently are subject to general debate; the European regulators have announced that they will not accept (at least comprehensive) “back-branching” by EEA institutions after Brexit.

The bill grants BaFin flexibility regarding its orders. BaFin may decide about the length of the transition periods at its discretion and may further limit its transitional orders to certain types of transactions. BaFin also has the general power to impose conditions and shall pay particular attention to deposit and investor protection schemes.

Individual exemption for proprietary business

In addition to the general transition periods, the bill also provides for a specific relief measure for certain trading activities of UK entities. Limited to “proprietary business” (Eigengeschäft), UK entities will be deemed to have been granted an exemption from the licensing requirement pursuant to Sec. 2 (5) KWG with effect from the withdrawal date if they file a “complete” application with BaFin within 3 months after Brexit.

The German regulator will require certain corporate and other documents in order for such an application of the UK entities to be considered as “complete”. So far, the German regulator has not yet specified its relating requirements. A certain indication could be the documentation necessary for an earlier transitional procedure that is referred to for purposes of the specific Brexit relief measure: BaFin required, in particular, a “statement of no prior or pending convictions” (Straf­freiheits­erklärung) signed by each board member in connection with these earlier transitional procedures. The enclosures further included a detailed description of the business activities, current financial statements, sample contract forms or the appointment of a receiving agent in Germany.

“Proprietary business” (Eigengeschäft) is one of 2 regulated activities transposing into German law the MiFID II investment service “dealing on own account”. This additional relief measure may thus be relevant for continued regulated trading activities of UK entities in Germany. However, this specific measure will not cover the regulated activity of “proprietary trading” (Eigenhandel), i.e., “dealing on own account” that is provided as a service for others. The latter activity includes, in particular, market makers and systematic internalisers. Also, high-frequency trading is defined to be a case of “proprietary trading” (even if not provided as a service for others) and will therefore be excluded from the scope of the specific relief measure.


The explanatory statement of the bill mentions that the general powers of BaFin remain unaffected. In the individual case, the regulator may therefore allow a UK institution to conduct regulated activities on a cross-border basis beyond the scope of the specific relief measure described above. The examples given, however, are rather restrictive (transitional exemption until a license has been granted; exemption for purposes of the orderly run-off of business).

Pursuant to the explanatory statement of the bill, the German Federal Government expects UK institutions to either terminate the relevant business relationships, obtain a German license (by establishing a dependent German branch) or transfer the respective business to a licensed provider before the end of the national transition period. In this regard, it is worth noting that the reasoning does not mention the possibility to provide regulated services without a German license at the request of the client (so called “reverse solicitation”). Pursuant to BaFin’s administrative practice in the past, such exception could also cover maintaining an existing relationship.

The bill also covers various other Brexit-related matters (including tax issues triggered by the withdrawal of the UK and investments in assets located in the UK in connection with, for example, German Pfandbriefe).

Norton Rose Fulbright LLP: Contact Martin Krause or Michael Born


Currently there is no proposal similar to Germany’s Brexit-StBG (see above). A proposal for a ‘BREXIT- Accompanying Law 2019’ has been introduced into the Austrian Parliament but it currently does not provide for a temporary permissions regime which makes it possible for UK investment firms to provide services in Austria. The only financial market matter which is currently dealt with by the proposal is the fact that UK UCITS shall not be treated immediately as alternative investment funds (AIFs) after a no deal Brexit meaning that employee pension funds may not need to sell UK UCITS before 29 March 2019 in order to comply with the investment limits for AIFs. In addition an amendment to the Insurance Supervision Act has been proposed so that the same benefit applies to the cover funds of fund linked life insurance policies.

Geppert & Maderbacher Rechtsanwälte: Contact Stefan Geppert


On 7 February 2019, Ordinance No. 2019-75 dated 6 February 2019 relating to the preparatory measures for the withdrawal of the UK from the EU with respect to financial services (the Ordinance)[1] was published.

The Ordinance provides for a number of measures in relation to financial services which will enter into force as from the date of exit of the UK from the EU, in the event of hard Brexit, i.e. a Brexit with a no-deal.

Below is a high level summary of the measures provided by the Ordinance:

  • Interbank settlement systems and delivery and settlement systems:
    • a measure is designed to recognise UK interbank settlement systems and delivery and settlement systems (such as CLS, CHAPS, CREST and the UK clearing houses) as interbank settlement systems and delivery and settlement systems benefitting from the provisions of Directive 98/26/EC on settlement finality in payment and securities settlement systems; and
    • the rationale of this measure is to avoid French participants to these systems being excluded from the UK systems on the basis of the legal uncertainty which would result from the absence of recognition (by French authorities) of the UK systems as benefitting from the provisions of the Directive 98/26/EC.
  • Supervision powers of the Autorité de Contrôle Prudentiel et de Résolution (ACPR):
    • the Ordinance provides that: “This power of sanction is exercised in respect of persons and facts which are within its scope of supervision on the date of the breach or the offense.” This provision provides that the ACPR remains competent for control of the acts or omissions committed by UK regulated firms prior to the withdrawal of the UK from the EU; and
    • the Ordinance also provides that the ACPR is competent to control compliance with French law with respect to the performance of agreements entered into pre-Brexit, on the basis of the cross-border passport or branch passport, which parties continue to perform after Brexit.
  • Designation of the Autorité des marchés financiers as a competent authority to supervise activities relating to securitization.
  • Implement specific rules for the management of collective investment schemes, the assets of which comply with specified investment ratios in European entities:
    • the Ordinance provides for a grandfathering clause in relation to investment in UK entities for collective investment schemes; and
    • broadly, UK entities will still be eligible for specified investment ratios in European entities after Brexit during a period of time to be set by an Arrêté of the French Minister of Economy, within a maximum of 3 years.
  • Ensuring the continuity of the use of master financial services agreements (such as ISDA agreements):
    • the French Government took measures to adapt French law in relation to the scope of the transactions eligible to netting and the possibility to provide for compound interests in order to allow master financial services agreements to be governed by French law; and
    • the Ordinance also provides for a mechanism of transfer of master financial services agreements (such as ISDA agreements) from UK entities to French entities belonging to the same group. This transfer of master financial services agreements can be carried out on the basis of the implicit consent of the French counterparty on the basis that the French counterparty has not opposed to such transfer within 5 days from the receipt of the offer of transfer. The transfer must also comply with a number of other requirements. This mechanism of transfer will only be available during 12 months as from the date of entry into force of the Ordinance (i.e. the date of withdrawal of the UK from the EU in absence of a deal).
  • Finally, a provision of the Ordinance aims, broadly, at protecting French insured having entered into an insurance contract with a UK risk carrier before Brexit, whilst encouraging the latter to transfer to an EU risk carrier its insurance business in respect of risk located in France.

The French Government has not to date announced a temporary permissions regime for inbound passporting UK financial firms and funds.

Norton Rose Fulbright LLP: Contact Roberto Cristofolini


On 24 January 2019, the Ministry of Economic and Finance issued a press release to inform the market that the Italian Government is preparing the necessary measures to ensure the continuity of markets and intermediary business should a hard Brexit occur (i.e. exit with no deal). The press release is available at this link (in Italian).

The measures, which have been drafted after consulting with competent supervisory authorities and hearing relevant sectoral association, are aimed at ensuring financial stability, market integrity and business continuity as well as protecting investors and depositors, and more generally, clients. This aim would be achieved through an “adequate” transitional period where relevant persons may carry on their activities. The envisaged duration of such a transitional period has not been specified, yet.

During such a proposed transitional period, UK banking, financial and insurance entities (including entities operating in the context of secondary welfare) that passport into Italy before the UK exits the EU will be able to continue to provide their activities in Italy and vice versa (Italian entities in UK; obviously, this would be subject to UK laws and regulations, as well).

As for the content, the measures are expected to discipline inter alia:

  • the requirements to be met under sectoral legislation to carry on business after the transitional period, so as to ensure a stable legal framework to which entities can gradually get used to;
  • the trading venues’ regime and operators’ access; and
  • investments by Italian pension funds in UK funds (the aim is allowing them to keep such UK investments in the transitional period).

To date, the measures, which need a law decree to be issued by the Italian Government to be enacted, have not yet been published. However, the Italian Government will ensure, given that the date of publication will depend on future developments and on decisions adopted within the UK, that the measures will be published in draft in advance to allow the orderly performance of activities in a certain legal framework, even in case of hard Brexit.

For the sake of completeness, this topic was also raised by the former CONSOB chairman (Mr Nava) who, during a public speech held on 10 September 2018 regarding the impact of Brexit on the Italian market, mentioned that Consob was working – in the remit of what is set out under the existing Italian regulatory framework – to ensure that Italian trading venues could export their business in the UK (as well as in other EU countries), and mentioned the possibility of adopting a “temporary permissions regime” – such as those already developed by the UK authorities – to let Italian trading venues permit UK entities trading on their facilities subject to certain conditions.

On 12th March 2019, CONSOB asked inter alia UK investment firms to provide timely and accurate information to all Italian customers on potential consequences on rendering investment services in the event of a hard Brexit without temporary emergency relief measures, and to notify the Regulator if a material impact is expected.

Norton Rose Fulbright LLP: Contact Salvatore Iannitti or Pietro Altomani


In the Netherlands, a transitional regime has been published for investment firms (beleggingsondernemingen) with their seat in the UK in case of a no-deal Brexit. For other financial institutions such as banks, regulated markets and insurers, no transitional regimes have been proposed (yet). This would mean that in case of a no-deal Brexit, these financial institutions will be treated as third-country firms under the Act on the Financial Supervision (Wet op het financieel toezicht, AFS) and in principle require authorization in order to continue to provide regulated services within the Netherlands.

More generally, legislation is in preparation regarding the so-called ‘Dutch Brexit Act’, making it possible to quickly take necessary legislative action by means of a general administrative order or Ministerial decree instead of by changing the law.

Transitional regime for investment firms

On 12 February 2019, the amendments to the Exemption Regulation AFS (Vrijstellingsregeling Wft, the Exemption Regulation) in relation to the (temporary) exemptions for investment firms based in the UK was published in Dutch Government Gazette (Staatsblad), stipulating that Article 10 of the Exemption Regulation will apply to investment firms with their seat in the UK if the UK and the EU have not entered into an agreement on the exit of the UK from the EU. The Exemption Regulation is available in Dutch only.

The consequence of this exemption is that investment firms with their seat in the UK are exempted from the license obligation for providing investment services and/or the investment activity dealing on own account in the Netherlands, insofar provided to professional investors or eligible counterparties. A condition is that the investment firm will need to be supervised in the UK and it will need to notify the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, the AFM). The investment firm will largely be exempted from the prudential and ongoing code of conduct requirements as set out in the AFS.

The exemption will apply to investment firms from the UK acting on a cross-border basis or via a branch office in the Netherlands. The fees for the notification with the AFM are EUR 4,400.

The date of entry into force of this exemption can be set by means of a ministerial decree (where necessary retroactively). This means that any registration of UK investment firms is currently still conditional to such ministerial decree in case of a no-deal Brexit. If there is a deal on Brexit and a transitional regime for investment firms, registration under this exemption will not take place.

Despite the aforementioned conditionality, UK investment firms are nevertheless urged to register themselves with the Netherlands Authority for the Financial Markets Authority (Autoriteit Financiële Markten, the AFM) as soon as possible. The notification form that needs to be used for this purpose is now available on the AFM’s website.

Dutch Brexit Act

In addition, on 16 November 2018, the Dutch Minister of Justice and Security (Minister van Justitie en Veiligheid, the Minister) submitted a legislative proposal to the Dutch Parliament proposing changes to a number of laws and regulations in the Netherlands in preparation for Brexit (the Dutch Brexit Act). On 29 January 2019, the draft Dutch Brexit Act is adopted by the Dutch Parliament (Tweede Kamer) and has been sent to the Dutch Senate (Eerste Kamer) for consideration.

The explanatory notes to the Dutch Brexit Act provide that the proposal is a product of an inventory that was carried out to see whether Dutch laws needed to be amended as a result of Brexit. This inventory was based on the fact that the withdrawal of the UK will lead to the loss of its EU membership, irrespective of whether consensus will be reached on a Withdrawal Agreement or the UK leaves the EU without an agreement in place (hard Brexit). For most cases, it turned out that the existing legislative frameworks offer sufficient freedom to be able to act quickly and adequately in each of the currently foreseen scenarios. Therefore, the Dutch Brexit Act only contains technical amendments to Dutch legislation that are strictly necessary and need to enter into effect as of 30 March 2019.

In view of the complexity and the amount of legislation possibly affected by Brexit, the Dutch legislator believes it to be important that quick legislative action can be taken in cases of urgent, unforeseen issues resulting from Brexit. This is only insofar as is necessary for the proper implementation of a Brexit-related binding EU legal act or to avoid unacceptable consequences. Therefore, the Dutch Brexit Act contains a generic provision making it possible to quickly take necessary legislative action by means of a general administrative order or ministerial decree instead of by changing the law. These emergency legislative actions will in principle have a transitional nature, meaning that they will generally apply only temporarily and/or will be substituted by a more structural / formal legislative action.

It is important to note that neither the Dutch Brexit Act nor the explanatory notes thereto include (or mention) changes or measures aimed specifically at the financial sector. However, the aforementioned generic provision can also be used as a basis for legislative actions that may need to be taken in the financial sector.

Norton Rose Fulbright LLP: Contact Floortje Nagelkerke and Nikolai de Koning


The Swedish Government has decided on a legislative proposal giving rights to the Swedish government to issue temporary regulations, or to delegate the authority to issue such regulations to the Swedish Financial Supervisory Authority (the SFSA) making it possible for UK MiFID II investment firms to provide services into Sweden until the end of 2021. This is on the basis that approximately 150 Swedish companies, of various size and in various industries, have derivatives relationships with UK counterparties.

The new rules have so far not yet been published. However, the Ministry of Finance has informally confirmed that there will be no delegation to the SFSA of authority to issue the upcoming transitional regulatory regime. Instead, the regime will take the form of a government regulation. The change in law is proposed for a 29 March effective date which means the final rules cannot be issued until that date. However, it is generally expected that the legislation will reach the next stage of the process in the next couple of weeks and for an official proposal to be published then, and this should allow the Ministry of Finance to draft its regulation. However, it is not expected that there will be any advance publication of the expected government regulation substantially ahead of its effective date.

Gernandt & Danielsson: Contact Niclas Rockborn, Klara Tersman or Rikard Sundstedt


The Finnish government has concluded that it is necessary to add a provision to the Investment Services Act (747/2012) (ISA) that would enable third-country investment firms to offer services into and conduct investment activities in Finland without establishing a branch. This would involve applying for authorization from the Finnish Financial Supervisory Authority (FIN-FSA). Such proposal is currently being processed by the Finnish Parliament and it is expected to be approved.

The proposed authorization to provide services cross-border into Finland would essentially act as an extension of UK investment service providers’ (including banks providing these services under a MiFID II passport regime) right to offer services and conduct investment activities in Finland under their currently valid EU passports.

According to the proposed Chapter 5 Section 7 of the ISA, the FIN-FSA will grant the authorization, if:

  • the European Commission has not adopted an equivalence decision concerning the service provider’s home country, or if such a decision would not be in force. (If such a decision were in force, the investment firm could be entered into a register maintained by the European Securities Markets Authority (ESMA), allowing the investment firm to provide services also to Finnish investors);
  • the regulatory environment in the third country and the supervision of the service provider by the third-country regulator is essentially equivalent to the regulation and supervision under the MiFID II and ISA. In practice, the service provider’s home country regulator should have concluded a memorandum of understanding concerning cooperation arrangements with the FIN-FSA;
  • the service provider is authorized in its home country to provide investment services;
  • the service provider has an action plan specifying the services and possible ancillary services to be offered and activities to be conducted, its organizational structure and description of possible outsourcings of critical and important functions; and
  • the service provider has sufficient capital.

Other possible requirements specified by the FIN-FSA based on the final legislation must also be met. The bill does not specify the exact documentation or information to be provided, nor does it list the possible reporting requirements or application fees. According to the Finnish Parliaments’ Economic Committee’s proposal the annual supervisory fee would be 3,210 euros per year.

According to Chapter 3 Section 2 of the ISA, the FIN-FSA must process an authorization application within six months of receiving the application. If the application is incomplete, the six months will be calculated from the date on which the applicant has provided all necessary documents and information.

Interim arrangements for UK investment firms

The Finnish government’s bill also specifies interim arrangements for UK firms, enabling them to temporarily continue their activities in Finland after Brexit. This option would be reserved for UK investment firms or credit institutions providing investment services based on a valid EU passport, provided that they apply for cross-border authorization by no later than the date Brexit enters into force. These service providers could then continue to provide the services specified in their passporting notification until the FIN-FSA has processed their authorization. After that, the applicant could operate in Finland with the new cross-border authorization, if granted. Any new services, however, would have to be authorized separately, as described above.

It would also be possible to submit the application before the amendments enter into force, provided that the application be supplemented as needed, and considering that the processing period for the application would not begin before Brexit enters into force. During the six-month processing period specified above, the service provider would be subject to the regulations of its home country.

Roschier: Contact Jussi Pelkonen or Jaakko Laitinen


The Belgium Financial Services and Markets Authority (FSMA) has issued a communication of 21 February 2019 concerning the provision of investment services and performance of investment activities in Belgium by firms governed by the law of the UK after a hard Brexit. The communication describes the system that applies in Belgium to investment firms governed by the law of the UK or Gibraltar after entry into force of a hard Brexit. It also examines the issue of the impact of a hard Brexit on the continuity of contracts in force, entered into in Belgium by investment firms governed by the law of the UK or Gibraltar. The communication looks at this issue from the angle of administrative law, i.e. the impact of the loss of a European passport on the ability to continue the performance of such contracts for investment firms governed by the law of the UK that will no longer be authorised to carry on their activity in Belgium.

The communication provides that third-country investment firms that intend to offer or supply investment services and/or perform investment activity in Belgium, by establishing branches, must first be authorised by a Belgian supervisory authority, which, depending on the case, will be the National Bank of Belgium or the FSMA. Third country investment firms governed by the law of a third country that intend to offer or supply investment services and/or perform investment activities in Belgium, without establishing a branch, are authorised to do so, but they must adhere to certain conditions (discussed further in section 2.2 of the communication).  These include:

  • the services or activities must actually be provided or performed in the home State;
  • the third country investment firm may only approach the following types of investors: eligible counterparties, per se professional clients and persons established in Belgium with the nationality of the home State of the company concerned or of a State in which the third country investment firm has established a branch.

The FSMA asks investment firms governed by the law of the UK that are active in Belgium to inform the FSMA if they intend to pursue their activity in Belgium and, if so, under which form (establishment of a branch or provision of services without establishing a branch).

If they have not already done so, firms that wish to establish or maintain a branch in Belgium are asked to submit an authorisation dossier to the National Bank of Belgium or the FSMA, depending on the type of investment services or activity for which they are authorised in the UK.

The FSMA also asks firms that wish to commence or carry on the supply of investment services in Belgium under the freedom to provide services, without establishing a branch, and that fulfil the conditions mentioned above, to notify the FSMA specifying the envisaged activity in Belgium and the categories of investors to which they intend to supply their investment services. The notification must be in a prescribed form, a link to which is set out in the communication. The email address to which the completed form must be sent is also set out in the communication.

Lydian: Contact Tom Geudens or Pieterjan Van Assche


Under Danish legislation third country firms may obtain a cross-border licence for non-retail business. Retail business requires the establishment of a branch. The Danish Financial Supervisory Authority (DFSA) will permit applications from UK investment firms before the UK leaves the EU even though such firms are not (yet) third country firms. The timing for the application procedure (from submission of the application to receiving the approval from the DFSA) is approximately 3-4 months. There are no upfront costs involved with the application process, and investment firms will not be subject to annual fees under Danish law. The DFSA will grant a conditional licence to such firms but the license does not enter into force until and unless the UK leaves the EU. The ESMA multilateral MoU between EEA regulators and the FCA announced on 1 February 2019 satisfies Danish UCITS and AIFM regulatory requirements for an MoU.

The DFSA has issued a press release, clarifying that cross-border licences granted to credit institutions and investment firms licenced in the UK are expected to be temporary licences granted for a period of 12 months from Brexit due to political uncertainty. Accordingly, firms holding such a temporary licence will have to apply for a new licence within 12 months from the licence date in order to be able to continue offering the services covered by the licence on a cross-border basis into Denmark. The license will only be granted with effect as of the Brexit date, whether it will be on 29 March 2019 or a later date.

The DFSA has indicated that they would be able to look at applications from UK firms with existing passporting rights rather quickly and will try to process such applications in advance of Brexit in order to avoid a licence gap, but currently we have no clear indication on the timing to be expected due to the inflow of Brexit-related applications.

Kromann Reumert: Contact Andreas Hallas or Susanne Schjølin Larsen

 Republic of Ireland

The ESMA Multilateral Memorandum of Understanding with the FCA announced by ESMA on 1 February 2019 will facilitate Irish fund management companies to be able to continue to delegate investment management activities to UK firms post Brexit and UK firms to be able to continue to provide investment services to, and to engage in investment activities with, regulated Irish funds, fund management companies and other per se professional clients and eligible counterparties in Ireland.

Delegation by Irish fund management companies to UK firms of the investment management of Irish funds post Brexit

Regulation 21(1)(d) of Ireland’s EU (Alternative Investment Fund Managers) Regulations, 2013 (AIFMD Regulations) requires that an Irish authorised Irish alternative investment fund manager (AIFM) or internally managed alternative investment fund (AIF) cannot delegate portfolio management or risk management to a third country firm unless, inter alia, “co-operation between the [Central] Bank and the supervisory authority of the undertaking shall be ensured”.

Similarly, Regulation 23(1)(d) of Ireland’s European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2011, as amended (UCITS Regulations), requires that an Irish UCITS management company or self-managed UCITS cannot delegate investment management to a third country firm unless “co-operation between the [Central] Bank and the supervisory authorities of the third country concerned is ensured”.

The ESMA Multilateral MoU between EEA regulators and the FCA announced by ESMA on 1 February 2019 satisfies both of these requirements.

UK AIFMs acting as AIFMs to Irish AIFs post Brexit

Upon a hard Brexit, such entities will become third country AIFMs for Irish regulatory purposes. The Central Bank of Ireland has confirmed in its AIFMD Q&A (ID 1129) that, firstly, an Irish AIF can retain or appoint UK AIFMs post Brexit and secondly that the relevant Irish AIF must contractually impose on any third country AIFMs the requirements which the Central Bank imposes on Irish registered AIFMs that act as AIFMs to Irish regulated AIFs. These requirements, which are largely taken from organisational and conduct of business requirements of the AIFMD Regulations, are set out in Part III of Chapter 2 of the Central Bank’s AIF Rulebook.

Procedurally, the Central Bank has requested Irish AIFs that wish to retain UK AIFMs post 29 March 2019 to notify the Central Bank by email by 22 February 2019.

Legal capacity of UK firms to provide investments services to, or engage in investment activities with, Irish clients post Brexit

Regulation 5(5)(b) of Ireland’s European Union (Markets in Financial Instruments) Regulations, 2017 (MiFID II Regulations) provides a full exemption for a third country firm which provides one or more investment services to, or engages in one or more investment activities (with or without ancillary services), with, per se professional investors / eligible counterparties in Ireland provided that:

  1. the firm does not establish a branch in Ireland;
  2. is subject to authorisation and supervision in the third country where the third-country firm is established and the third-country firm is authorised so that the appropriate regulatory body in that third country pays due regard to any recommendations of FATF in the context of anti-money laundering and countering the financing of terrorism; and
  3. co-operation arrangements that include provisions regulating the exchange of information for the purpose of preserving the integrity of the market and protecting investors are in place between the Central Bank of Ireland and the competent authorities where the third-country firm is established.

The ESMA Multilateral MoU between EEA regulators and the FCA announced by ESMA on February 1st, 2019 satisfies the requirement at “(c)”. The Central Bank of Ireland had previously confirmed that the IOSCO multi-lateral Memorandum of Understanding, of which the Central Bank and FCA are signatories, also satisfied this requirement.

Dillon Eustace: Contact Donnacha O’Connor


The Spanish Government has enacted Royal Decree Law 5/2019 (the RDL), which provides a set of temporary measures to deal with a no-deal Brexit.

The RDL encompasses an array of fields such as residence and labour permits for UK expatriates, retirement contributions, healthcare, transport services, etc.

From a financial services regulatory standpoint, aiming to preserve continuity in the provision of financial services, the main temporary measures introduced by the RDL are as follows:

  • continuity of financial agreements: financial agreements entered into prior to Brexit by a UK entity providing services in Spain shall remain in force;
  • authorization: from Brexit onwards UK entities shall be regarded as third country entities. Thus, notwithstanding the continuity of existing financial agreements, UK entities providing services in Spain must apply for the relevant authorization if they: (i) renew or amend their existing agreements; (ii) enter into new agreements; (iii) engage in the provision of new services; (iv) where the activities derived from the management of the agreements require authorization;
  • temporary extension of authorization: authorizations previously granted shall remain in place until the year-end. It is expected that entities enjoying this grace period shall apply for a new authorization (either as a local subsidiary or as a third country entity providing services on a cross-border basis) or, alternatively, they shall orderly terminate or assign the agreements in place to any suitable third party;
  • supervision: Spanish regulatory bodies shall retain their faculties to request information, inspect and impose sanctions on UK entities operating in Spain. Non-cooperative entities shall be prevented from the grace period referred to above;
  • implementation: Spanish regulatory bodies are vested with remarkable leeway to adopt the measures that they deem necessary to ensure investor protection; and
  • entering into force: The RDL shall be applicable when the UK formally leaves the EU. It shall not be applicable if the UK withdraws its Brexit application in agreement with the EU.

Application forms for UK entites seeking to become established in Spain:

Garrigues: Contact Luis de la Pena


On 5 March 2019, the Polish government proposed a legislative act that would introduce temporary measures applicable to select financial institutions established or located the UK in an event of no-deal Brexit. This includes credit institutions, investment firms, insurance and re-insurance undertakings, payment institutions and investment funds. In respect of credit institutions, the proposed law sets out measures ensuring continuation of credit agreements without obtaining regulatory approvals from the Polish Financial Supervisory Authority (Komisja Nadzoru Finansowego or KNF) for a maximum period of 24 months. It also introduces 12-month contract continuity for other agreements to which a UK-located bank is a party. In respect of investment firms located or established in the UK and providing investment services or undertaking investment activities in Poland, the proposed law introduces a 12-month transitional period. During this transitional period, UK firms will not be permitted to enter into new agreements or extend the duration of the existing ones. Following the expiry of the transitional period, the UK firms that seek to continue provide investment services or engage in investment activities in Poland will need to obtain permission from the KNF. The proposed law foresees no notification requirement for UK firms that would seek to avail of the transitional provisions. The proposed law awaits parliamentary approval but it is expected to be proceeded smoothly.

Norton Rose Fulbright LLP: Contact Agnieszka Braciszewska or Anna Carrier 

[1] An ordinance is a piece of secondary legislation passed by the French Government (Ministers) under the powers given to it by an act of Parliament pursuant to Article 38 of the French Constitution.

This briefing also features as a post on our Financial services blog: Regulation tomorrow.

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